The Impact of International Sanctions on The Economy of Iran

• Název práce v češtině: Vliv mezinárodních sankcí na ekonomiku Íránu
• Název v anglickém jazyce: The Impact of International Sanctions on The Economy of Iran
• Klíčová slova: metoda syntetické kontroly, jaderný program, HDP na obyvatele, Írán, sankce, obchod, ropa
• Klíčová slova anglicky: synthetic control method, nuclear programme, GDP per capita, Iran, sanctions, trade, oil
• Akademický rok vypsání: 2018/2019
• Typ práce: bakalářská práce
• Jazyk práce: angličtina
• Ústav: Institut ekonomických studií (23-IES)
• Vedoucí / školitel: PhDr. Jaromír Baxa, Ph.D.
• Řešitel: skrytý - zadáno vedoucím/školitelem
• Datum přihlášení: 10.05.2019
• Datum zadání: 10.05.2019
• Datum a čas obhajoby: 10.06.2020 09:00
• Datum odevzdání elektronické podoby: 06.05.2020
• Datum proběhlé obhajoby: 10.06.2020
• Oponenti: PhDr. Miroslav Palanský, Ph.D.

Zásady pro vypracování

Research question and motivation
In my thesis, I would like to focus on the structural changes in the Iranian economy due to the many sanctions that the Islamic republic has experienced in the 21st century.

Since the Islamic revolution in 1979, Iran had experienced several major crisis including the war with Iraq. Nonetheless, the economy recovered and particularly because of the vast oil reserves it has grown steadily. In the 2000s, Iran announced its ambition to pursue the nuclear program which has been thought by many to be used for nonpeaceful purposes. The West had adopted several sanctions that had severely hit the economy. Luckily for Iran, the administration of president Obama signed a nuclear deal with the Islamic republic in 2015 which has an almost immediate positive effect on the main macroeconomic variables. Nevertheless, the recent sanctions imposed by Trump´s administration put Iran back into even worse crisis given that every country involved in trade with Iran is also affected by them.

My thesis addresses the development after the 2000s by looking primarily at the components of the GDP, where the production of oil, the literal lion´s share, has been the primary target of the sanctions. Generally speaking, Iran has stated that through the modernization, mainly through its nuclear program, it wants to achieve economic sustainability. The hypotheses is that had it not been for the sanctions, the Islamic republic would easily adopt its economy to the needs of 21st century.

Contribution
Little has been done on the economic effects of the sanctions on Iranian economy. It goes without saying that the topic is a hot issue, particularly with the imposition of new sanctions on Iran. Only with deep knowledge of the economic history, we can precisely assess the development of the economy of Iran.

My thesis should examine the development since the announcement of the nuclear program in the 2000s. Moreover, I will focus on the structural changes measured by the changes in the composition of the GDP. The thesis should help to assess how diligent the regime has been in transforming the economy and how the economy would possibly look like had it not been for the sanctions.

Methodology
I would like to combine the international data, e.g. from IMF or UN with the Iranian data provided by the Iranian central bank. The main method will bet the synthetic control method, thus I would like to assess the periods when some sanctions were lifted and how the economy would develope had it not been for the sanctions. I would also like to consider the Kingdom of Saudi Arabia as a relevant comparable economy, clearly not affected by the sanctions and the major conflicts in the Middle East.

Seznam odborné literatury

Gary Clyde Hufbauer, Jeffrey J. Schott, and Kimberly Ann Elliott, Economic Sanctions Reconsidered, second edition, revised (Washington: Institute for International Economics, 1990)
Abadie, A., Diamond, A., Hainmueller, J., 2010. Synthetic Control Methods for Comparative Case Studies: Estimating the Effect of California’s Tobacco Control Program. Journal of the American Statistical Association, 105:490, 493-505.
Abadie, A., Diamond, A., Hainmueller, J., 2014. Comparative Politics and the Synthetic Control Method. American Journal of Political Science, Volume 59, Issue 2, pages 495-510, April 2015.
Pchelintsev, Dmitriy, 2017 Evaluating the Effect of 2014 Sanctions against Russia Using Synthetic Control Methods. Master´s thesis. Faculty of Social Sciences Institute of Economic Studies
Amuzegar, J. (1997b), ‘Iran’s Economy and the US Sanctions’, The Middle East Journal, 51, 2, 185–99.
Orkideh Gharehgozli, Economics Letters Volume 157, August 2017, Pages 141-144 An estimation of the economic cost of recent sanctions on Iran using the synthetic control method.

Předběžná náplň práce

Research question and motivation
In my thesis, I would like to focus on the structural changes in the Iranian economy due to the many sanctions that the Islamic republic has experienced in the 21st century.

Since the Islamic revolution in 1979, Iran had experienced several major crisis including the war with Iraq. Nonetheless, the economy recovered and particularly because of the vast oil reserves it has grown steadily. In the 2000s, Iran announced its ambition to pursue the nuclear program which has been thought by many to be used for nonpeaceful purposes. The West had adopted several sanctions that had severely hit the economy. Luckily for Iran, the administration of president Obama signed a nuclear deal with the Islamic republic in 2015 which had an almost immediate positive effect on the main macroeconomic variables. Nevertheless, the recent sanctions imposed by Trump´s administration put Iran back into even worse crisis given that every country involved in trade with Iran is also affected by them.

My thesis addresses the development after the 2000s by looking primarily at the components of the GDP, where the production of oil, the literal lion´s share, has been the primary target of the sanctions. Generally speaking, Iran has stated that through the modernization, mainly through its nuclear program, it wants to achieve economic sustainability. The hypotheses is that had it not been for the sanctions, the Islamic republic would easily adapt its economy to the needs of 21st century. The main questions are following. How diligent the regime was in adapting its economy under the sanctions and how would the economy look like had it not been for the sanctions?

Contribution
Little has been done on the economic effects of the sanctions on Iranian economy. It goes without saying that the topic is a hot issue, particularly with the imposition of new sanctions on Iran. Only with deep knowledge of the economic history, we can precisely assess the development of the economy of Iran.

The primary literature, I will be using, will be the Economic Sanctions Reconsidered. In this weighty tome many issues concerning sanctions are discussed. I will focus on the chapters evaluating the costs to the sender and target country as well as the total effectiveness of the sanctions imposed. When it comes to the principal methodology of my thesis, I would like to use a similar approach as my fellow colleague Mgr Dmitriy Pchelintsev did in his Evaluating the Effect of 2014 Sanctions against Russia Using Synthetic Control Methods. The synthetic control method appears in many papers, so it may be examined on a broad variety of subjects. I would like to study the most famous ones, i.e. Estimating the Effect of California’s Tobacco Control Program, Comparative Politics and the Synthetic Control Method. As already said, there are only few papers discussing the economy of Iran under the various sanctions. The majority of them is rather a socio-political discussion than a thorough economic analysis of the structural changes. Nonetheless, I would like to use Iran’s Economy and the US Sanctions as some basic description of the economy of the Islamic republic.

My thesis should examine the development since the announcement of the nuclear program in the 2000s. Moreover, I will focus on the structural changes measured by the changes in the composition of the GDP. The thesis should help to assess how diligent the regime has been in transforming the economy and how the economy would possibly look like had it not been for the sanctions.

Methodology
I would like to combine the international data, e.g. from IMF or UN with the Iranian data provided by the Iranian central bank. The main method will bet the synthetic control method, thus I would like to assess the periods when some sanctions were lifted and how the economy would develope had it not been for the sanctions. I would also like to consider the Kingdom of Saudi Arabia as a relevant comparable economy, clearly not affected by the sanctions and the major conflicts in the Middle East.

Outline
Abstract
Introduction
a. why is my topic interesting
b. brief economic history of the Islamic republic Iran
c. brief overview on global sanctions
d. how I add to existing research
e. main results and their meaning
f. the structure of the thesis
Literature review
a. the economic history of Iran and the structure of its economy
b. the history of sanctions on Iran
c. the synthetic control method- how it can be used
d. what hypotheses will be tested
Methodology
a. description of data
b. why I use the independent and dependent variables I use, how they are measured
c. how I perform tests
Results
a. rejecting / not rejecting hypotheses
b. my interpretation of the results
Conclusion
a. interpretation of the results
b. how can we possibly evaluate the recent sanctions imposed by the U.S.

Předběžná náplň práce v anglickém jazyce

Research question and motivation
In my thesis, I would like to focus on the structural changes in the Iranian economy due to the many sanctions that the Islamic republic has experienced in the 21st century.

Since the Islamic revolution in 1979, Iran had experienced several major crisis including the war with Iraq. Nonetheless, the economy recovered and particularly because of the vast oil reserves it has grown steadily. In the 2000s, Iran announced its ambition to pursue the nuclear program which has been thought by many to be used for nonpeaceful purposes. The West had adopted several sanctions that had severely hit the economy. Luckily for Iran, the administration of president Obama signed a nuclear deal with the Islamic republic in 2015 which had an almost immediate positive effect on the main macroeconomic variables. Nevertheless, the recent sanctions imposed by Trump´s administration put Iran back into even worse crisis given that every country involved in trade with Iran is also affected by them.

My thesis addresses the development after the 2000s by looking primarily at the components of the GDP, where the production of oil, the literal lion´s share, has been the primary target of the sanctions. Generally speaking, Iran has stated that through the modernization, mainly through its nuclear program, it wants to achieve economic sustainability. The hypotheses is that had it not been for the sanctions, the Islamic republic would easily adapt its economy to the needs of 21st century. The main questions are following. How diligent the regime was in adapting its economy under the sanctions and how would the economy look like had it not been for the sanctions?

Contribution
Little has been done on the economic effects of the sanctions on Iranian economy. It goes without saying that the topic is a hot issue, particularly with the imposition of new sanctions on Iran. Only with deep knowledge of the economic history, we can precisely assess the development of the economy of Iran.

The primary literature, I will be using, will be the Economic Sanctions Reconsidered. In this weighty tome many issues concerning sanctions are discussed. I will focus on the chapters evaluating the costs to the sender and target country as well as the total effectiveness of the sanctions imposed. When it comes to the principal methodology of my thesis, I would like to use a similar approach as my fellow colleague Mgr Dmitriy Pchelintsev did in his Evaluating the Effect of 2014 Sanctions against Russia Using Synthetic Control Methods. The synthetic control method appears in many papers, so it may be examined on a broad variety of subjects. I would like to study the most famous ones, i.e. Estimating the Effect of California’s Tobacco Control Program, Comparative Politics and the Synthetic Control Method. As already said, there are only few papers discussing the economy of Iran under the various sanctions. The majority of them is rather a socio-political discussion than a thorough economic analysis of the structural changes. Nonetheless, I would like to use Iran’s Economy and the US Sanctions as some basic description of the economy of the Islamic republic.

My thesis should examine the development since the announcement of the nuclear program in the 2000s. Moreover, I will focus on the structural changes measured by the changes in the composition of the GDP. The thesis should help to assess how diligent the regime has been in transforming the economy and how the economy would possibly look like had it not been for the sanctions.

Methodology
I would like to combine the international data, e.g. from IMF or UN with the Iranian data provided by the Iranian central bank. The main method will bet the synthetic control method, thus I would like to assess the periods when some sanctions were lifted and how the economy would develope had it not been for the sanctions. I would also like to consider the Kingdom of Saudi Arabia as a relevant comparable economy, clearly not affected by the sanctions and the major conflicts in the Middle East.

Outline
Abstract
Introduction
a. why is my topic interesting
b. brief economic history of the Islamic republic Iran
c. brief overview on global sanctions
d. how I add to existing research
e. main results and their meaning
f. the structure of the thesis
Literature review
a. the economic history of Iran and the structure of its economy
b. the history of sanctions on Iran
c. the synthetic control method- how it can be used
d. what hypotheses will be tested
Methodology
a. description of data
b. why I use the independent and dependent variables I use, how they are measured
c. how I perform tests
Results
a. rejecting / not rejecting hypotheses
b. my interpretation of the results
Conclusion
a. interpretation of the results
b. how can we possibly evaluate the recent sanctions imposed by the U.S.